GCC reinsurers upbeat on 2012 prospects

Manama, September 26, 2012

Market sentiment remains upbeat among reinsurers and brokers operating in the GCC amid hope that the impact of last year's near-record burden of catastrophe losses will translate into an improved pricing and profitability outlook, according to a survey.

The third GCC Reinsurance Barometer is a survey released on behalf of the Qatar Financial Centre Authority.

The annual study is based on in-depth interviews conducted with 33 reinsurance and brokerage executives, representing the majority of the region's players in the sector.

"The impact of last year's near-record burden of global catastrophe losses, the aftermath of the Arab Spring and growing primary insurance markets will translate into an improved pricing and profitability outlook," the report said.

In 2011, the combined gross domestic product of the six GCC countries amounted to $845 billion, ranking the region among the 20 largest economies in the world.

From 2007 to 2011, the region's economies grew at an average pace of four per cent annually, twice as fast as the rest of the world.

Insurance markets in the GCC reflect the region's economic dynamics. Between 2006 and 2010, GCC insurance premiums expanded almost five times as fast as the global average.

Infrastructure and construction spending continues to be the single biggest driver for insurance demand in the region.

"Based on these strong economic fundamentals, confidence in the prospects of the reinsurance sector in the GCC remains high as the region continues to be perceived as one of the world's most attractive insurance and reinsurance growth markets, benefiting from a relatively low exposure to natural perils," the report said.

"The Qatar Financial Centre Authority is committed to promoting reinsurance as a key pillar of Qatar's financial sector development strategy," said chief executive Shashank Srivastava.

"A healthy reinsurance industry is an important facilitator of economic progress in Qatar and the GCC region.

"We, therefore, feel encouraged by the recent survey's finding that the attractiveness of Qatar and the GCC as a marketplace for reinsurers continues to increase.

"The GCC reinsurance market is worth more than $5 billion and poised to expand briskly," added Qatar Financial Centre Authority director of strategic development Akshay Randeva.

"As a world-class regional financial centre, it is our ambition to continue to support future market growth by attracting talent and expertise and by enhancing the transparency of the marketplace through additional benchmarks for decision-making.

"The third GCC Reinsurance Barometer contributes to this objective," he added.